Imputation of Agency Knowledge and the Discovery Rule: Triggering Prescription under Louisiana Products Liability Law

Introduction

This commentary examines the Fifth Circuit’s decision in Allied World National Assurance Company v. Nisus Corporation (5th Cir. Apr. 18, 2025), which arises from a multi‐million‐dollar products‐liability dispute over chlorinated polyvinyl chloride (CPVC) fire sprinkler pipes that cracked and leaked in a Louisiana State University (LSU) campus development. Allied World, as subrogee of the project owner Provident Group-Flagship Properties, sued Nisus Corporation—manufacturer of a termiticide/insecticide/fungicide concentrate (Bora-Care with Mold-Care)—for allegedly misrepresenting product compatibility with CPVC. The district court granted summary judgment for Nisus, holding that Allied’s claims were time-barred under Louisiana’s one-year prescription rule, because RISE Residential (the owner’s facilities manager) had constructive knowledge of the root cause before the cut-off date and that knowledge was imputed to Provident. The Fifth Circuit affirmed.

Summary of the Judgment

The Fifth Circuit affirmed summary judgment for Nisus on the ground that Allied’s claims under the Louisiana Products Liability Act, redhibition, and warranty were prescribed. Under Louisiana Civil Code article 3492 (the one-year liberative prescription then in force), prescription runs from the day damage is sustained or is reasonably knowable. The court applied the contra non valentem equitable‐tolling doctrine and its discovery‐rule exception, concluding:

Provident itself did not have actual or constructive knowledge before July 23, 2020.
Provident’s agent, RISE Residential, did acquire constructive knowledge by early 2020—through internal reports, emails, and lab results identifying Mold-Care overspray as the cause of pipe fractures—and failed to follow up.
That agent knowledge was imputed to Provident, triggering prescription before Allied filed suit on July 23, 2021.
Nisus did not effectually prevent timely suit: its product label and an email to Arrow Pest Control post-dated the crucial period and did not forestall RISE Residential’s duty to investigate and report.

Analysis

Precedents Cited

Louisiana Civil Code art. 3492 (repealed 2024): one-year liberative prescription for product‐liability; prescription runs from date damage is sustained or reasonably knowable.
In re Taxotere (Docetaxel) Products Liability Litigation, 995 F.3d 384 (5th Cir. 2021): articulated contra non valentem tolling and discovery‐rule exception; constructive knowledge suffices.
Chevron USA, Inc. v. Aker Maritime, Inc., 604 F.3d 888 (5th Cir. 2010): constructive notice “requires more than mere apprehension” and duty to investigate arises when plaintiff suspects something is wrong.
Jordan v. Employee Transfer Corp., 509 So. 2d 420 (La. 1987): reasonableness test for investigating potential claims; prescriptive period begins once plaintiff has a reasonable basis to pursue a specific defendant.
Cannata v. Bonner, 982 So. 2d 968 (La. App. 3 Cir. 2008): agent’s knowledge imputed to principal when acting within scope of agency.

Legal Reasoning

The court’s reasoning unfolds in three steps:

Triggering Prescription under Louisiana Law. Under La. Civ. Code art. 3492, products‐liability claims prescribe in one year from “the day injury or damage is sustained” or when the damage is “reasonably knowable.” Contra non valentem tolls prescription only in exceptional cases such as when the cause of action is unknown (“discovery rule”) or when the defendant prevents suit.
Constructive Knowledge and Duty to Investigate. The court held that when RISE Residential’s personnel exchanged emails in November–December 2019 expressing concern over unusual pipe cracks and learned that Lemoine’s lab tests implicated Mold-Care, a duty to investigate and pursue those results arose. That duty was breached when RISE Residential failed to follow up, even as new leaks mounted. Under Chevron/Aker Maritime, suspicion of a problem triggers an obligation to seek out responsible parties; failing to do so makes prescription run from the point of constructive notice.
Imputation of Agent’s Knowledge to Principal. Provident’s contract with RISE Residential made the latter its agent for facility maintenance, repairs, and reporting. Under Louisiana law, notice acquired by an agent acting within the scope of authority is imputed to the principal. RISE Residential’s constructive knowledge thus became Provident’s knowledge, starting the prescription clock before July 2020.
No Tolling by Defendant’s Misconduct. Allied argued that Nisus’s product label and emails to Arrow Pest Control misrepresented compatibility and delayed suit. The court found these after-the-fact representations insufficient to toll prescription, as Allied’s agents already possessed or should have pursued the lab findings linking Mold-Care to CPVC degradation.

Impact

This decision underscores several points for future Louisiana‐law products-liability cases:

Agents’ investigations and reporting obligations can start the prescription clock for the principal, even if the principal remains unaware.
Suspected product defects require prompt follow-up; constructive knowledge triggers prescriptive deadlines.
Post-damage misrepresentations or failure to warn will not toll prescription if a reasonable inquiry would have revealed the cause earlier.
Contractual definitions of agency scope matter: facility managers and similar agents must track defects and lab results or risk imputing knowledge to their principals.

Complex Concepts Simplified

Prescriptive Period (Liberative Prescription): The time limit within which a lawsuit must be filed. Under former La. Civ. Code art. 3492, products‐liability suits had to be filed within one year of damage becoming reasonably knowable.
Contra Non Valentem (Equitable Tolling): An exception to prescription when the plaintiff did not or could not know of the cause of action (“discovery rule”) or when the defendant prevented timely filing.
Discovery Rule: A subset of contra non valentem. Prescription does not run until a plaintiff knows or should know, through reasonable diligence, the facts giving rise to a claim.
Constructive Knowledge: Knowledge that a party “should have” through reasonable diligence—more than suspicion but not full evidentiary proof.
Imputation of Knowledge: Under Louisiana law, knowledge acquired by an agent about a matter within the scope of their authority is treated as the principal’s knowledge.

Conclusion

The Fifth Circuit’s decision in Allied World National Assurance Company v. Nisus Corporation clarifies the interplay between the discovery rule, constructive knowledge, and agency‐imputed knowledge under Louisiana products‐liability law. It reaffirms that a one-year prescription begins when a reasonably diligent agent uncovers or should have uncovered the cause of damage, and that the principal is charged with the agent’s knowledge. Defendant misconduct, such as post-damage misrepresentations, cannot salvage an untimely suit if the plaintiff’s agents already had or should have had the requisite information. This precedent will guide practitioners in managing internal investigations, agent reporting duties, and the timely assertion of claims in Louisiana and in other jurisdictions that heed similar discovery‐rule principles.